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Visa Inc. is teaming up with the hot smart-phone manufacturer Samsung Electronics Co. Ltd. to kick-start the market for near-field communication (NFC) payments, and it’s also got a deal with technology provider Roam to develop mobile payments.
Under an agreement with South Korea-based Samsung that Visa announced Monday, banks and credit unions that want to launch mobile-payments services will be able to use the Visa Mobile Provisioning Service to securely download, over the air, payment card account information to a chip on NFC-enabled Samsung devices. Visa also says that Samsung has agreed to load the Visa payWave applet onto its NFC devices. The applet will enable consumers to wave an NFC-enabled phone near a contactless-enabled point-of-sale terminal in order to complete payment, much the way they do already with a Visa payWave card.
NFC is a short-range, high-capacity radio technology that many observers say is ideal for many mobile applications, including loyal programs and payments. NFC, however, requires that the phone have an NFC chip and that the POS terminal be able to communicate with the chip, which is why leading mobile-payments players such as PayPal Inc., Starbucks Corp. and Square Inc. use other technologies. Few smart phones currently in the U.S. have NFC capabilities, but Samsung is a leader in the small but growing market. Its lineup includes the popular NFC-equipped Galaxy S III, and the NFC-capable Galaxy S IV model is expected to debut in mid-March, according to press reports.
Mary T. Monahan, research director of mobile at Javelin Strategy & Research, a division of Greenwich Associates, notes that the Visa-Samsung pact casts the spotlight on the issuer side of mobile payments at a time when most of the recent attention has been on merchant side. “It’s all chicken-and-egg,” she says. Monahan adds that Visa’s initiative to bring Europay-MasterCard-Visa (EMV) chip card payments to the U.S. is intertwined with NFC adoption.
Jim McCarthy, Visa’s global head of product, said in a news release that, “The key to making mobile payments broadly available all over the world is to offer financial institutions a secure way to provision millions of smart phones with payment account information, and that is exactly what Visa and Samsung are ready to deliver.”
Visa awarded Samsung a payWave license that enables the payWave applet to be preloaded on certain Samsung phones with an embedded secure element. Off the shelf, consumers can load the devices with their Visa account information by using an app provided by their card-issuing financial institution, according to Visa. A Visa spokesperson would not identify any issuers that will use the Samsung services, but says by e-mail that “We do expect to make those announcements soon.”
Many observers have expressed disappointment that Apple Inc.’s iPhone 5 doesn’t have an NFC chip. Monahan believes the Visa pact could give Samsung an edge over its arch-rival. “Apple didn’t do it, so look what happened,” she says. “This is just making it more interesting.”
Apple is the leading smart-phone maker in the U.S., with 36.3% market share in the fourth quarter compared with 21% for No. 2 Samsung, according to Reston, Va.-based comScore Inc. But, fueled by a surge in smart-phone sales, Samsung in 2012 surpassed Apple as the world’s No. 1 seller of what research firm International Data Corp. (IDC) calls “smart connected devices,” or smart phones, tablet computers, mobile personal computers and desktop PCs. Samsung sold 250 million such devices globally last year, says Framingham, Mass.-based IDC.
“The partnership with Visa represents a step towards a global mobile payment platform,” Won-Pyo Hong, president and head of Samsung’s Media Solution Center, said in the release. “We believe that we have a strong value proposition for financial institutions that will ultimately allow consumer choice in NFC payments.” A Samsung spokesperson did not respond to a Digital Transactions News request for further comment.
Under their new agreement, Visa and Samsung also will work together on future Samsung devices using Visa payment technology. The announcement came at the big Mobile World Congress conference in Barcelona, Spain, where Visa also said that it was working with Roam, a Boston-based mobile-payments technology provider for merchants now owned by POS terminal maker Ingenico S.A.
Roam is the first company to enlist in the Visa Ready Partner Program, a technology and marketing effort Visa announced Friday to promote merchant acceptance and Visa card usage. Visa and Roam will jointly promote their respective merchant products globally. And in some countries, Visa will provide Roam with application program interfaces (APIs) and software development kits (SDKs) in order to connect to Visa via a number of payment gateways, including the Visa-owned CyberSource and Authorize.Net platforms acquired by Visa in 2010. This will enable merchants of all sizes to accept Visa transactions, Visa said.
Further, Roam, which provides white-label card-accepting hardware for a number of mobile-payments processors, will white-label mobile-acceptance devices for use with Visa EMV chip, contactless and magnetic-stripe card payments. The devices will be compatible with CyberSource and Authorize.Net mobile services, according to Visa.
